Magazine article New Statesman (1996)

Jobless (and Less)

Magazine article New Statesman (1996)

Jobless (and Less)

Article excerpt

It is a common misconception that welfare spending soared under New Labour. In fact, the Brown government left office with overall spending at 7.26 per cent of GDP, down from the 11.3 per cent average of the Thatcher-Major years.

One notable trend that continued under Labour was the decline in value of unemployment benefit relative to earnings. In 1970, unemployment benefit rates ([pounds sterling]5) represented 19.2 per cent of average weekly earnings ([pounds sterling]26.10). But the Conservative Party chose to raise benefits in line solely with prices from 1980 onwards, with the result that the replacement rate (the percentage of an old wage that a new benefit replaces) fell to 16.6 per cent in 1985. First John Major, and then Tony Blair, stuck with the policy change and benefit rates fell to 13.8 per cent in 1995 and to 12.2 per cent in 2000.

Today, Jobseeker's Allowance (currently [pounds sterling]65.45 a week for a single person aged 25 or over) is worth just 10. …

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